Bluescope Steel Limited · ASX:BSL
Bluescope Steel — Technical Presentation (June 2008)
42 slides from Bluescope Steel's technical presentation, Jun 5, 2008
Slide 1: New Zealand Steel Analyst Site Visit
For personal use only New Zealand Steel Analyst Site Visit Ross Murray President New Zealand Steel & Pacific Islands 5 - 6 June 2008
Slide 2: Important Notice
Important Notice For personal use only THIS PRESENTATION IS NOT AND DOES NOT FORM PART OF ANY OFFER, INVITATION OR RECOMMENDATION IN RESPECT OF SECURITIES. ANY DECISION TO BUY OR SELL BLUESCOPE STEEL LIMITED SECURITIES OR OTHER PRODUCTS SHOULD BE MADE ONLY AFTER SEEKING APPROPRIATE FINANCIAL ADVICE.
Slide 3: Presentation
Presentation For personal use only • Introduction – Safety Message – Organisation • Safety • Environment & Sustainability • History • Blueprint • Operations & Financials • Marketing & Sales • Summary 3
Slide 4: BlueScope business structure
BlueScope business structure For personal use only Managing Director and CEO Legal (Michael Barron) CFO (Charlie Elias) Paul O’Malley People and Organisational Performance (Ian Cummin) Aus/NZ Steel Australian Coated Australian Corporate Strategy Manufacturing and Industrial Distribution and and Inno
Slide 5: New Zealand & Pacific Islands leadership
New Zealand Steel & Pacific Islands For personal use only Ross Murray President New Zealand Steel & Pacific Islands Gary Hook Anthony Burg Martin Hacon Tony Wright Norm Clark Bob Pullein Scott Fuller Vice President Vice President Vice President Vice President Vice President Vice President Vice Presi
Slide 6: Safety Highlights
Safety Highlights For personal use only Lost Time Injury Frequency Medically Treated Injury • Site-wide open access Rate Frequency Rate safety and operational 18 70 incident reporting system 16 implemented 2007 Medically treated injuries per million man-hours worked 16 60 60 Lost time injuries per m
Slide 7: Environmental Highlights
Environmental Highlights For personal use only • Clean and Green initiative – continued landscaping Non-compliance industrial site and key riparian zones in NZS farmland. Future work planned for both Glenbrook and Taharoa as mitigation measures for consented activities. 25 20 • Environmental Managem
Slide 8: Proposed Emissions Trading Scheme
Proposed Emissions Trading Scheme For personal use only Proposed New Zealand Government Emission Trading Scheme • All gasses and eventually all sectors • Steel sector in scheme from December 2010 • 90% free credits (2005 base) to 2018 • Zero credits by 2030 (rate of credit removal for trade exposed
Slide 9: Environment and sustainability – benefits of cogeneration
New Zealand Steel and sustainability – benefits of cogeneration For personal use only 1200 1000 800 Internal Cogeneration GWh 600 400 Electricity 200 from NZ grid 0 5 6 3 4 5 6 7 8 9 0 1 2 3 4 7 8 9 0 1 2 3 4 5 6 7 /8 /8 /9 /9 /8 /8 /8 /8 /9 /9 /9 /9 /9 /9 /9 /9 /0 /0 /0 /0 /0 /0 /0 /0 /0 83 84 91 9
Slide 10: New Zealand Steel's history
New Zealand Steel’s history For personal use only The beginning of an era (1950s - 1960s) New Zealand Steel Investigating Company set up by the New Zealand government New Zealand Steel Limited formed as a private company Commenced commercial operations using imported steel coil with a Galvanis
Slide 11: Today
Today For personal use only Integrated mill with 625,000 tonnes of steel making capacity with metal coating, painting, hollow sections, plate and structural beam facilities Mastered a unique direct reduction process based on local ironsands Ownership of ironsand resource Captured a niche mar
Slide 12: New Zealand & Pacific Island Blueprint
New Zealand Steel & Pacific Island Blueprint For personal use only CORE OBJECTIVES 8 BLUEPRINT BASICS BUSINESS PERFORMANCE 1. INCREASE CUSTOMER AND • Satisfy our customers’ quality, delivery and cost expectations profitably throughout the business cycle MARKET FOCUS • Partner with our customers and
Slide 13: Operations – New Zealand
Operations – New Zealand For personal use only Glenbrook Iron and Steel production Auckland Hot and Cold Rolling Mills Glenbrook Tauranga Dual Pot Metal Coating Line Wharf Waikato North Head Paint Line Taharoa Plate Line Hollow sections plant Waikato North Head Mine Concentrated iron s
Slide 14: Operations – Pacific Islands & Australia
Operations – Pacific Islands & Australia For personal use only Fiji • Components business • Roll formed roofing and cladding products plus accessories • Operate in two locations, Suva and Lautoka • FY07 sales of 4,500t • PEB capability including in-house design, engineering, structural steel supply
Slide 15: Production Process
Production Process For personal use only Attached link takes you to full New Zealand Steel Production Process http://www.bluescopesteel.com/index.cfm?objectid=4C8AE684-F795-D7AC-0477497D4DD97727 15
Slide 16: Unique direct reduction process
Unique direct reduction process For personal use only 16
Slide 17: Raw materials
Raw materials For personal use only Iron Sand Concentrate (Waikato North Head Mine) Iron sand mined and concentrated on site - 58.5% Fe 13mt of contained product in probable reserves and 13mt of contained product in proven reserves Additional 591mt of inferred resource Concentrate is slurry
Slide 18: Steelmaking production & productivity
Steelmaking production & productivity For personal use only Production Productivity 700 Slab tonnes per primary plant employee 3000 600 Half Half Year 2500 Year 500 2000 (000's tonne) 400 1500 300 1000 200 500 100 0 0 01/02 02/03 03/04 04/05 05/06 06/07 1H 07/08 01/02 02/03 03/04 04/05 05/06 06/07 1
Slide 19: Ironmaking – resolution of Kiln accretion issues
Ironmaking – resolution of Kiln accretion issues For personal use only Accretion growth on the kiln lining damages refractories, blocks discharge system and disturbs process gas flows Resolved by improved control of silica levels in ironsand feed at minesite Hot Metal Production loss due to Kiln
Slide 20: Production (monthly)
Production (monthly) For personal use only Slab Caster Metal Coating Line Paintline 55 19 6 50 5 18 4 45 17 3 Kt Kt Kt 40 2 35 16 1 30 15 0 2003 2004 2005 2006 2007 1H08 2003 2004 2005 2006 2007 1H08 2003 2004 2005 2006 2007 1H08 Actual 51.6 50.9 51.0 49.0 49.0 51.9 Actual 17.9 16.6 18.0 18.0 18.5 1
Slide 21: Relentless cost control
Relentless cost control For personal use only Examples of 2008 improvement projects include: FY 2008 Improvement Projects NZ$m 25 • Introduction of universal primer 20 • Reduction of breakouts 15 • Procurement savings 10 • Additional attritioner benefits 5 • Additional slab production 0 Jul Aug Sep
Slide 22: Capital
Capital For personal use only Average capital invested 1998 – 2008 approximately A$23m per annum Commissioned Project Capex (A$m) 1998 Melter 1 Reline $24.0m 2002 Melter 2 Reline $15.5m 2004 – 2005 Metal Coating Line Upgrade $14.0m Paint Line Upgrade $3.0m SAP ERP $12.0m 2006 HSM Computer Upgrade $8
Slide 23: Financial Performance – NZ & Pacific Steel Products
Financial Performance – NZ & Pacific Steel Products For personal use only Fiscal Year 2000 2001 20021 2003 2004 20052 2006 2007 2008 1H 2H FY 1H Raw Steel (kt) 555 602 552 620 611 610 589 293 301 594 312 Sales Revenue $A 495 501 497 567 581 746 709 364 364 728 341 EBITDA $A 80 76 45 87 98 217 132 56
Slide 24: Nominal product flow
Nominal product flow Mine Sites For personal use only Iron Sand Concentrate 2.3mt Export Export New Zealand Steel Iron Sand Vanadium Slag 0.6mt Slab Concentrate 14 kt 0.6mt Hot Rolled 1.0mt Export Export Hot Cold Strip Domestic Domestic Domestic Plate Rolled Mill Pipe Hot Rolled Plate 4% 34% (7%+27%
Slide 25: Market – New Zealand sales vs export sales
Market – New Zealand sales vs export sales For personal use only Growing the NZ market Reducing dependence on Deep Sea Exports Sales within New Zealand Sales outside New Zealand (incl. Pacific Islands) 350 300 450 400 250 350 200 300 250 kt 150 kt 200 100 150 50 100 50 0 0 1994 1995 1996 1997 1998 1
Slide 26: Domestic market structure is unique
Domestic market structure is unique For personal use only Value Proposition Top 4 Domestic Customers = 80% • Short lead times • Fletcher Building • Stock lock in’s • Steel & Tube • Small order size • Metalcraft • Delivery reliability • Vulcan • Brands and Quality • Technical back up Major Competitor
Slide 27: Product distribution (1H08)
New Zealand Steel - product distribution (1H08) For personal use only Indicative Product Mix (t) Indicative Sales by Country (t) Painted Asia Pacific Islands 11% 6% 2% Metal Coated Australia 14% Japan 26% Cold Rolled 3% 13% USA/Canada 24% Pipe 4% Indicative Sales by Sector (t) Hot Rolled Manufacturi
Slide 28: Domestic sales (1H08)
New Zealand Steel - domestic sales (1H08) For personal use only Indicative Product Mix (t) Indicative Sales by Sector (t) Manufacturing Painted 9% 16% Other Distribution 13% 36% Cold Rolled Metal Coated 12% 46% Pipe 9% Building & Hot Rolled Construction 17% (incl. Plate 13%) 41% * External & Interna
Slide 29: New Zealand domestic delivery performance
New Zealand domestic delivery performance For personal use only 100 90 80 70 60 50 % 40 30 20 10 0 00/01 01/02 02/03 03/04 04/05 05/06 06/07 1H08 29
Slide 30: Export sales (1H08)
New Zealand Steel - export sales (1H08) For personal use only Indicative Product Mix (t) Indicative Sales by Region (t) Other Japan, 7% Metal Coated 5% Asia, 5% 6% Cold Rolled 13% North America, 47% Australia, 29% Hot Rolled 76% (incl Plate 10%) Pacific Islands, 12% * External & Internal sales 30
Slide 31: Export sales geographic mix changed
Export sales geographic mix changed For personal use only • Optimising return of available export volumes has resulted in increasing importance of USA market • Winner of 2007 AMCHAM Exporter of the Year award. Export Total Volume By Regions FY2002 Export Total Volume By Regions FY2007 SE ASIA 11% SE
Slide 32: Steel sustainability – telling the story
Steel sustainability – telling the story For personal use only • The New Zealand Herald • Progressive Building • Building Today • RoofLink • SCOPE • SteelTalk 32
Slide 33: Steel sustainability & market share
Steel sustainability & market share For personal use only • Low waste • 100% recyclable • High strength to weight ratio • Sensitive to building occupants • Non combustible 33
Slide 34: Steel sustainability & market share
Steel sustainability & market share For personal use only • Launch COLORSTEEL® CP Antibacterial • Merchandising display stands • Brand/product/channel print advertising • Home Ideas Centre permanent display 34
Slide 35: Non steel revenue streams
Non steel revenue streams For personal use only Iron Sand Iron sand successfully repositioned as a blast furnace feed in niche markets (Sales 06/07 year 730kt, H1 07/08 year 418kt) Contracts with China and Japan Scrap Record iron production leading to surplus plate iron – high grade scrap Re
Slide 36: Non steel revenue streams - Vanadium Slag
Non steel revenue streams - Vanadium Slag For personal use only What is vanadium? Historical global market prices ¾ Vanadium in its pure form is a metal V2O5 ¾ It is present in the NZS ore body as an oxide 30.00 within the individual grains of Titanomagnetite ironsand. It is extracted in slag form
Slide 37: Iron sand mineral opportunities
New Zealand Steel mineral opportunities For personal use only Overview • The abundant iron sand resource at New Zealand Steel (“NZS”) has become an increasingly more valuable asset to BlueScope Steel. • A number of projects are being studied or considered. • However, final approval will be subject t
Slide 38: Specific project opportunities
Specific project opportunities For personal use only • The specific projects being studied or considered are: – Vanadium Converter Project – Increases the quality and quantity of vanadium slag recovered from the existing hot metal supply. Also increases slab make thereby reducing slab unit cost and
Slide 39: Vanadium Converter Project
Vanadium Converter Project For personal use only Vanadium Converter Recovery of slag containing V2O5 increased from 15ktpa to 30ktpa V2O5 content in slag increased by approx 7%. Net V205 increased from approx 2ktpa to 5ktpa Liquid Iron Increases HRC production by 5% (30ktpa) Reduces slab cost as a r
Slide 40: Taharoa Iron Sands – expansion or sale
Taharoa Iron Sands – expansion or sale For personal use only Taharoa is located approx. 300km south of Auckland Titanomagnetic iron sands Mine is leased from the local Maori owners – 70 year lease from 1972 Resources: – Proven – 75mt – Probable – 112 mt – Total inferred indicated and measure
Slide 41: Summary
Summary For personal use only • Continued focus on safety, environment and community • Specific Blueprint focus on – Customers, market share and sustainable steel – Productivity and capability – System and organisationl capability – Optimisation Projects • Vanadium Converter • Taharoa Iron Sands • F
Slide 42: Analyst Site Visit
For personal use only New Zealand Steel Analyst Site Visit Ross Murray President New Zealand Steel & Pacific Islands 5 - 6 June 2008